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With inflation leading to rising prices, shoppers are now contending with new trends such as ‘skimplation’. This refers to the practice of keeping the price of a product the same while downgrading the ingredients or quality to cheaper alternatives. It goes without saying that customers don’t take kindly to getting a poorer product in exchange for their money, so while skimpflation can help businesses save on production costs, it can lead to a damaged reputation and reduced sales.
In this article, we’ll delve into the phenomenon of skimplation and offer advice on how business owners can avoid having to resort to it to maintain their bottom line.
What is skimpflation?
Put simply, skimpflation is the act of “skimping” on the quality of a product or service. This usually involves using cheaper, lower-quality ingredients or materials. The motivation at the company’s end is, of course, to cut back on costs so they can maintain the same profits without having to increase their prices.
According to The Evening Standard, 2% of UK customers have noticed a downgrade in the quality of their favourite supermarket products, all while the price has remained the same, or even increased. Many report that crips, sweets, chocolate and biscuits have a noticeably inferior flavour and consistency.
This is just a report on consumers who have noticed the trend, but some companies are sneaky and make small adjustments that can’t necessarily be picked up on by customers. For example, a chocolate bar may go from containing 95% sustainably sourced, organic cocoa powder, to 75% without this resulting in a discernible difference in taste.
Examples of skimpflation
There are numerous examples of skimpflation. Customers tend to pick up on these the most in products they buy on a regular basis, such as food items. The above-mentioned Evening Standard article cites a customer who noticed their Sainsbury’s olive oil spread used to contain 21% olive oil, but now only has a mere 10%.
Other products that shoppers have noticed have dropped in the standard include Tesco’s own tissues, which no longer have the gentle, soft texture they once did and Aldi Bramwell’s Real Mayonnaise which now contains less real egg.
Skimpflation vs shrinkflation?
Skimpflation refers to a decrease in quality, while ‘shrinkflation’ is a decrease in the actual size or volume of a product. For example, an avocado oil bottle that went from containing 250ml to 200ml while still selling for the same price is shrinkflation. As consumers don’t always check the size or volume of the products they buy, shrinkflation often passes customers unnoticed, especially as the taste remains the same.
Consequences of skimpflation as a business
While it may be tempting to cut costs by reducing the quality of a product or opting for cheaper ingredients or materials, doing so isn’t without consequences. Below we’ll outline some of the repercussions businesses face as a result of skimpflation.
Damaged brand reputation: Customers often notice a difference in the taste of their product (if it’s a food item) and the robustness of other goods, such as household items. This can affect your overall brand reputation as you become known as a company that sells poor-quality items.
Losing customers: Consumers will be put off by the dishonesty displayed by companies that try to cut costs by sacrificing the quality of products they once trusted and enjoyed. They also may find they no longer like the product now that it’s demonstrably lower quality. This can result in a significant loss of customers.
Reduced competitiveness: If your products are clearly inferior to other products on the market ( even if they come at a lower price point) you may find your brand’s perceived value drop and ultimately lose out to other competitors in your market.
How to avoid resorting to skimpflation?
Instead of sinking into skimpflation tactics in an effort to drive down costs, you can alternatively employ the following strategies:
- Be transparent about raising prices – honesty will get you much further than sneakily reducing the quality of your products or services. You can do this through marketing emails and social media posts which explain why you’ve had to increase your prices and why you’re dedicated to delivering the same value to customers. Communicating in this way helps boost loyalty and can ensure sales stay constant despite price increases.
- Use reports and analytics to deduce where costs can be cut without reducing the quality of the end product. Square’s POS dashboard provides insights and advanced sales reports so you can easily keep an eye on your bottom line and see where you can finetune business expenses.
- Make sure payments come in on time with efficient invoice management . Getting paid fast can be a significant boost to cash flow and help you avoid skimping on production.
- Track and manage inventory so you can avoid losing money on wasted inventory as well as unforeseen stockouts that affect sales.
Skimpflation is a very real trend that consumers are catching wind of. Employing the above strategies and having the right software can help prevent your business from needing to resort to sneaky skimpflation tactics.
